How Will Indonesia’s Maritime Economy Fare in 2018?

On December 12, Rifky Effendi Hardijanto, the secretary general at Indonesia’s Ministry of Maritime and Fisheries, told reporters that the government under President Joko “Jokowi” Widodo would look to boost the procurement of goods and services in the maritime and fisheries sector in 2018 as one of its key priorities. Though Hardijanto’s remarks came as little surprise given the Jokowi government’s commitment to boosting the country’s maritime economy, they also masked the continued challenges Jakarta faces in doing so.

The attention to the maritime and fisheries sector is not by any means unique to the Jokowi administration. Given the fact that Indonesia is the world’s second-largest producer of fish, with marine products making up between 6 and 8 percent of the country’s gross domestic product (GDP) depending on the statistics used, any administration would have to contend with this issue in the context of the country’s economic development. Indeed, Jokowi’s predecessor, Susilo Bambang Yudhoyono, had also been involved in issues surrounding the marine and fisheries sectors, albeit from more of a foreign policy perspective in terms of sustainable development rather than just a domestic prism of economic development and sovereignty.

But it is also clear that Jokowi and his team have elevated the importance of the maritime domain as a national priority for Indonesia since coming to office. For Jokowi himself, who rarely displays a keen interest in foreign policy issues beyond their relation to Indonesia’s narrow domestic interests, most of this is rooted in a sense that the country is not realizing its full economic potential and that this is not translating into gains for the Indonesian people. As Jokowi himself put it bluntly at a maritime development policy meeting in June 2016, though around 70 percent of Indonesian territory is water, the maritime sector contributes less than 30 percent of gross domestic product, which is a lower percentage than other Asian countries with much less surrounding water, be it Japan or Thailand. The government calculates that Indonesia’s full maritime potential could be worth around $1.2 trillion a year and employ 40 million workers, but that the country is only realizing less than a tenth of this.

The Jokowi administration moved to make this a top priority from the outset, and the maritime economy angle has featured prominently in its plans since its entry into office. Jokowi’s global maritime fulcrum (or poros maritime dunia, PMD), which he articulated early in his presidency, and more recent documents that are meant to fulfill that vision, such as the National Ocean Policy, have included this important economic component, even though the headlines are often dominated by developments that are more on the defense or diplomatic side, be it the crackdown on illegal fishing through the public sinking of ships or the raising of the issue in various regional or international fora or with select bilateral states.

Put simply, the Jokowi government’s objective with respect to the maritime economy is to develop a set of core economic activities around Indonesia’s oceans that can then boost the overall national economy. As Indonesian Vice President Jusuf Kalla put it in an address at the World Ocean Summit in Bali in February 2017, if Indonesia can realize its full potential in key areas such as tourism, fisheries, and offshore oil and gas drilling, the maritime economy could contribute up to 25 percent of the country’s GDP, up from just 11 percent today.

To the administration’s credit, though it is still early, there has already been some success in the maritime economy realm. In the area of fisheries, for instance, government estimates indicate that fish production has doubled, and the Ministry of Maritime Affairs and Fisheries has been boosting programs to help small fishermen upgrade their equipment and techniques with the added funding it has been given by the Jokowi government. On ports, there has been progress on the development of a network of port projects to be developed under the government’s Sea Toll Road program, which is designed to improve maritime connectivity and slash logistics costs. Some price reductions of items have already been seen, and these are expected to continue on in the coming years as well.

Turning these aspirations into reality has proven much more challenging for the Jokowi government than the ambitious targets like those announced by Hardijanto (and which make the headlines) might suggest. Part of the problem is resourcing. Luhut Pandjaitan, one of Jokowi’s closest advisers, has publicly admitted that the Jokowi government can only come up with about a quarter of the investment it needs to boost the country’s maritime industry in areas like fisheries, energy, transport, and tourism as it intends. The rest needs to come from a combination of private sector funding and foreign investment, and thus far, at least, neither of those has panned out to the degree that the government had hoped.

Beyond the resourcing problem, implementation has also often been slow or troubled. At times, targets have gone unmet. For instance, a program to provide financial assistance to millions of small-scale fishermen to help them buy boats and better compete against bigger players has been slow to take off in 2017. Other times, projects that have already been approved have been met by massive delays and, at times, the sort of contract irregularities that are still unfortunately commonplace in other sectors in Indonesia.

Yet arguably the biggest concern among analysts is the issue of the sustainability of the initiative. At various points since Jokowi entered office, there have been doubts that the government may lose its momentum when it comes to implementing maritime economy initiatives, and that, should Jokowi lose his bid for reelection in 2019, we might see a reversal of some of the measures it has taken, several of them made by presidential decree and a function of administration priority rather than enshrined in law. That is important not only because it fuels endless anxious commentary, but also because it only reinforces the tendency of spoilers of such initiatives to dig in and wait the government out in the hope of a more “permissive” environment under its successor.

This is not just an existential concern either. In November, Pudjiastuti herself told the South China Morning Post in an interview that though Indonesia’s crackdown on illegal fishing had been quite successful thus far, she was worried that the big foreign fishing bosses may simply be biding their time until a less crusading minister comes along. The admission was yet another grim reminder of the potential reversibility of gains made in the maritime economy sector, irrespective of their magnitude and broader significance, and of the limits of the sort of linear projections some are too quick to make based off of goals provided by Hardijanto and others.